Samsung is still not out of the woods

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Samsung is still not out of the woods

Samsung Electronics Chairman Lee Jae-yong, who has spent four years and five months on trial over allegations of unlawful merger practices and accounting fraud in connection with succession planning, was acquitted of all charges on Monday in his appeals trial.
 
Although prosecutors may take the case to the Supreme Court, the appeals court ruling effectively marks the end of the legal uncertainties surrounding Lee and Samsung Group, as the factual determination of guilt or innocence is typically settled at this stage.
 
Lee was indicted in September 2020 on charges that he had unlawfully influenced the 2015 merger between Samsung C&T and Cheil Industries to solidify his control over the conglomerate.
 
During the investigation, the prosecution review committee of the Supreme Prosecutors’ Office recommended dropping the case, citing insufficient grounds for indictment. However, prosecutors disregarded the recommendation and indicted Lee three months later.
 
In February last year, the lower court acquitted him on all 19 charges. Prosecutors, dissatisfied with the ruling, adjusted their legal strategy, emphasizing accounting violations in their appeal.
 
Nevertheless, the appeals court dismissed the prosecution’s arguments, upholding the original acquittal. The 13 key Samsung executives indicted alongside Lee were also cleared of all charges.
 
Lee’s legal team welcomed the verdict, stating, “We hope that this ruling will allow the defendants to fully concentrate on their professional duties.”  
 
Samsung now faces an uphill battle. The company has endured more than eight years of leadership uncertainty due to legal risks — including both the impeachment-related probe and this case — disrupting strategic decision-making and eroding its global competitiveness.
 
During this period, Samsung prioritized stability over expansion, suspending major mergers and acquisitions (M&A) and holding back on bold investments, which ultimately stifled its ability to secure new growth engines.
 
As a result, Samsung has fallen behind competitors in high bandwidth memory (HBM) development, a key sector in the AI-driven semiconductor industry. Stock prices have slumped, and concerns over Samsung’s future have intensified.
 
The external environment is equally daunting. The rise of China’s AI startup DeepSeek has sent shock waves through the industry, while global competition in advanced technology sectors — including semiconductors — has only intensified.
 
Adding to Samsung’s troubles, the Trump administration’s escalating tariff war looms large. President Trump has signaled plans to impose sector-specific tariffs on semiconductors and steel, further exacerbating risks for Korean industries.
 
With its legal entanglements behind it, Samsung must seize the moment to reclaim its competitive edge in the AI race and make aggressive investments in future growth businesses. As a global industry leader, Samsung must also demonstrate an unwavering commitment to compliance and corporate governance to meet global standards.
 
The company must double down on research and development (R&D) to safeguard its technological lead, ensuring it maintains its competitive “super-gap” in key industries.
 
At the same time, the government and political circles must play their part. Policymakers should fast-track the Special Act on Semiconductors, ease regulatory constraints on corporate activities and refrain from excessive prosecutorial intervention — creating an environment where businesses can thrive.
 
In an era of fierce technological warfare, securing global competitiveness is not only Samsung’s corporate mission but also its way of contributing to the nation and society. 
 
Translated using generative AI and edited by Korea JoongAng Daily staff. 
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